On the Road Again

2008-03-04 by

Today TaxMama hears from Dorothy in Texas who says, “My husband is employed by the railroad and we live in a fifth wheeler. Our original home state was New Mexico. We now travel to railroad sites in Texas for employment. We rarely go to NM. Our home is rented. How much of our travel and living expenses can we actually deduct?”

Dear Dorothy,

You know what IRS would say about that under audit, right?

IRS would regard your tax home as your vehicle and would reject ALL the travel expenses.

Unless you have a legitimate home base, where you get all your mail, where you return to from time to time, where you are registered to vote, where you have a bank account – then, you are not traveling FROM home.

Home is where YOU are. Here is what IRS says.
http://www.irs.gov/publications/p17/ch26.html#publink100034324

So either establish a viable, believable tax home…perhaps in Texas, where this is no state tax, or you can’t use the travel deductions.

Establishing a home base, even if it’s in an RV park, will cost you rent. So decide if the cost it worth it, just to be able to take travel deductions.

But, if you are an employee, you can use the per diem rates for both lodging and meals, instead of your actual costs. www.gsa.gov/HP_01Trvl_perdiem In that case, your deduction will be huge! You’ll find detailed information about how to use the Per Diem rates in TaxMama’s new e-book. http://homebusinesstaxcuts.com/

And remember, you can find answers to all kinds of questions about your tax home, travel expenses and other tax issues, free. Where? Where else? At TaxMama.com

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IRS Publication 17
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Chapter 16-17 Covers Travel, Meals and Entertainment Expenses

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  1. James Wood Says:
    March 04th, 2008 at 12:20 pm

    I read recently of a Tennessee couple in similar circumstances who have been removed from the voting rolls because of the lack of a permanent residence in Tennessee. That might be specific to TN law, but it might also be another factor in deciding what to do.

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